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Lucille Said:

What does PMI cover?

We Answered:

PMI, or Private Mortgage Insurance, is a coverage that banks require you to have, if you've got less than 20% equity in your house.

It pays the BANK, if you default on the loan. After you default, the bank forecloses on you. They sell your house, and assess to you the balance between the mortgage amount, and the selling price - and add in all the legal fees. This becomes COLLECTABLE FROM YOU. Then they put their claim in under the PMI insurance - and collect that amount from them. BUT THEY CAN STILL COLLECT IT FROM YOU. You will owe that money forever, unless you file bankruptcy, even though the PMI paid the bank. Usually the bank will then sell your account to a collection agency.

The good news is - if your bank required you to have flood insurance, you likely have enough flood insurance to satisfy the balance on the loan, which is all the bank cares about. The flood insurance check will be written to the bank - will likely pay off your loan, then you're stuck with a wreck of a place you can't live in, and will keep getting property taxes on, until the local taxing authorities reposess it for that.



If the bank uses FDIC funds, it's not like a credit card company - they have to follow the government banking regulations, and cannot by law settle the debt like credit card companies do.


I have no idea where VLEEKS got that, I think she made it up. It doesn't cover all your repairs, and that's not what PMI means. That answer was so surprising, I read it twice.

What *I* would do, is try to sell the property. You *might* get enough from the flood insurance to demo the house after the loan is paid off, then you still have a lot you can sell.

Neil Said:

What does personal liability cover for a homeowners insurance policy?

We Answered:

Your HO insurer will cover personal liability issues and lawsuits resulting from your ownership of a home. Business related activities are specifically excluded (some policies have an endorsement for incidental business use IE a customer drops off a check at your house). Your kid at the park should be covered (varies by state and policy..civil law stuff)

If you have a business with four employees, you should have a business GL(general liability) policy that covers a gardening business. This will defend you if your customers sue you for something you or your employees did related to gardening.

Umbrella policies vary by company; some are extensions of existing underlying coverage, others offer coverage beyond your HO and auto insurance; either way they will not cover your business.

My recommendation: get a business GL policy to cover your business and take the 500K limit on your HO policy. Later when money is not so tight, get a personnal umbrella.

Jennie Said:

My husband is self employed carpenter... what insurance does he need?

We Answered:

http://www.viddler.com/telarsen/videos/6…

Here is my answer for you.

Robin Said:

How much does house insurance change when you change your vacation home into a part time rental?

We Answered:

You should probably just call your insurance company and ask them, tell them you are thinking about doing that and ask them for a quote. If you don't like it shop around, it might be worth it.